This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.

Thursday, June 29, 2017

Court of Appeals Confirms that Corporate Directors Owe Their Duties to the Corporation

Court of Appeals Confirms
that Corporate Directors Owe Their Duties to the Corporation

In a decision rendered last
week, the Kentucky Court of Appeals has affirmed the rule, previously laid down
in Ballard v. 1400 Willow Council of Co-owners,
Inc., it relying upon KRS § 273.215, that the directors of a corporation owe
their fiduciary obligations to the corporation, not to the individual members
thereof. Flint v. Jacobs, No.
2015-CA-000489-MR, 2017 WL 2713456 (Ky. App. June 23, 2017).

Ed Flint, brought this action
against Fred Jacobs, the latter having been the president of the Board of
Directors of Coach House, Inc., a condominium association organizes as a
nonprofit corporation. Flint has previously sued Coach House not less than four
times, with each of those suits dismissed and those dismissals affirmed on
appeal. In this instance, amongst other claims including conspiracy and
discrimination, Flint alleged that Jacobs breached a fiduciary obligation owed
by Jacobs to Flint.

In affirming the dismissal of
Flint’s lawsuit generally and in particular this claim, in reliance upon the Ballard v. 1400 Willow, decision, the
Court of Appeals wrote:

Directors of a condominium
association's non-profit corporation owe a fiduciary duty only to the corporation,
not to the individual condominium association members.